Q:
Based on the Employment Retirement Income Security Act (ERISA), a retirement plan may be considered QUALIFIED, if it meets all of the following criteria EXCEPT:
a) Vesting
b) Does not have to be offered to all employees
c) Eligibility Requirements
d) The investment of contributions and determination of benefits
A:
The correct answer is b.
With regard to eligibility, the plan must cover all employees 21 and older who have worked for the employer for at least two years, and at least one year for 401(k) plans. If more than one year is required, the employee must then be vested immediately at 100%. Vesting describes the schedule by which employees gradually receive the portion of monies contributed by the employer. Qualified plans receive a more favorable tax treatment than non-qualified plans and follow strict guidelines set forth by ERISA, which are specific to how the plan assets are invested and distributed. Non-qualified plans do not have to be offered to all employees. Qualified plans must be available to everyone.

RELATED FAQS

  1. Is a financial advisor required to have a degree?

    Discover the minimum educational requirements and financial licenses needed to become a financial advisor in the modern corporate ...
  2. If I have only a limited amount of time to study for the Series 6, what should I ...

    Learn what to focus on when studying for the Series 6 while reviewing important aspects of the exam, including its content ...
  3. What role does the 'chip cycle' play in the electronics sector?

    Read about some of the best and most popular test prep classes for the Series 6 FINRA securities licensing exam, including ...
  4. What does passing the Series 6 enable me to do?

    Learn more about the Series 6, what the examination and license are and what the license enables an individual to buy, sell ...
RELATED TERMS
  1. Series 6

    A securities license entitling the holder to register as a limited ...
  2. Series 79

    A examination to ensure a candidate is qualified to become a ...
  3. Research Analyst

    A person who prepares investigative reports on equity securities. ...
  4. Series 34

    An exam required for individuals seeking to engage in off-exchange ...
  5. Financial Advisor

    One who provides financial advice or guidance to customers for ...
  6. Series 28

    An exam given by the Financial Industry Regulatory Authority ...
Hot Definitions
  1. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  2. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
  3. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  4. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
  5. Ponzimonium

    After Bernard Madoff's $65 billion Ponzi scheme was revealed, many new (smaller-scale) Ponzi schemers became exposed. Ponzimonium ...
  6. Quarterly Earnings Report

    A quarterly filing made by public companies to report their performance. Included in earnings reports are items such as net ...
Trading Center